Two Year Mortgage Pay-off Plan

In July of 2012, sixteen months ago, I wrote a post outlining my plan to pay off my mortgage in five years, before the ARM rate resets.

On that schedule, the balances needed to look like this:
2012: $263,769.89
2013: $209,271.51
2014: $153,115.52
2015: $95,251.49
2016: $35,627.47

Well, the balance today is around $198,200, about $11,000 ahead of where the balance needs to be at the end of this year to stay on the original five year pay-off plan. The balance at the end of 2012 was around $259,600, which was about $4,000 ahead of that year’s required balance.

I am now amending my mortgage pay-off plan to pay it off by the end of 2015, slightly over two years from now and 3.5 years into the mortgage. The modified balance schedule is as follows:
2013: $180,317.05
2014: $91,284.28
2015: $0.00

I think that this is slightly aggressive, but it is quite possible. My current income projections put the balance at just under $180,000 at the end of this year, at around $100,000 at the end of 2014, and around $20,000 to $30,000 at the end of 2015, which means I need to come up with up to an extra $10,000 on top of my $20,000 savings account to pay the mortgage off by the end of 2015. I will re-evaluate the plan again in June/July of 2014 and then at the end of 2014.

What will I do after the mortgage is paid off? What about my idea to go to grad school? Well, in the fall of 2015, I will evaluate whether I want to go to grad school or keep working and if I want to go to grad school, then all of my savings from after the mortgage is paid off will go to online savings accounts to cover that. If I decide to not go to grad school, then I will build up a $20,000 general savings account again, then set aside 1/5th of the money to buy a new car in 2020 and stash money in taxable investment accounts since I’m already maxing out my available tax-advantaged retirement accounts.

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26 thoughts on “Two Year Mortgage Pay-off Plan

  1. Heck of a goal, and it certainly will significantly alter your monthly financial picture as you will have some serious cash to invest. I definitely think the added freedom to go to grad school or just keep pounding the investments is really fantastic.

    • Yep! That’s why I set out on the five year plan originally. It’s a lot easier to see only two years in advance though, so I think this will be easier to hit and keep motivated towards!

  2. I think before you decide if you go to grad school or not you would need to know how you want to spend your time. I am new to the blog and you clearly have the ability to save large amounts of money once your mortgage is paid off. That could have the effect of allowing you to retire soon after your mortgage is paid off and live off of your taxable savings while letting your tax advantaged savings continue to grow until “normal retirement” age. So how do you want to spend your time? At school, as a river rafting guide, hiking, doing charity work, teaching, moving up the corporate ladder? Once you can answer that question then you’ll have a better ability to make your plan.

    • Absolutely! I think that at this point, I will probably wait until I pay the mortgage off to figure that out exactly. There are so many options to choose from and I don’t really know what I want right now since it’s still not a possibility.

  3. Amazing, I didn’t believe it was possible to pay off a mortgage so fast! That sounds like a good plan… hopefully everything goes to plan and you can reassess your situation in Fall 2015. I’m kind of doing the same with my own plan. I want to get to 7-10 rental properties by 2015… at that point, I’ll decide if I want to attempt early FI, or maybe keep grinding for a little longer and build up some more savings.

    Best of luck!

    • Hah well watch me pay it off in 3 years, not 3.5 years ;) I might also try to find a lower paying, fewer hours software job. Maybe I could find a part-time job somewhere… That’d be cool and probably better than retiring from work completely. If I could cover my expenses with a W-2 or some 1099s, then my savings/investments could just grow for a while yet!

  4. Very impressive! What ever happened to your plan to move to a single family home in the city? Did you decide to stay in the condo?

    • Thanks! You must have me confused with someone else…though I did originally plan that I would move to a house at some point later in life, but for now, I’m staying in the condo. I don’t know if I will end up in a house or not, but it’s definitely not for me now!

  5. We did a very similar thing, Leigh. I will say that there’s a part of me, in retrospect, that had invested the money in the market instead. It’s easy to say that in retrospect since our mortgage payoff period from 2010-2013 coincided with a huge market rally.

    Still, choosing between an aggressive mortgage payoff or investing is choosing between two very good options. It’s also quite possible that a goal like a mortgage payoff is motivating enough to result in larger monthly sums than would have been achieved if your goal was to invest, or any other number of financial goals.

    Good luck with your goal, and keep us posted!

    • Hindsight is 20/20, isn’t it? I feel that concentrating on one goal, no matter what it is, will yield the best results. For now, I think that concentrating on the mortgage will yield the best results, but once that’s gone, concentrating on investments will surely yield wonderful results!

      I can’t wait to squash this mortgage!

  6. I was thinking of starting a new master’s program in 2014, but I’m probably going to postpone it and concentrate on other projects. I already have 2 master’s, so getting a 3rd would be for fun. Right now I need to concentrate more on building our side business through rental income and online properties.

    • Sounds like a good plan! It’s important to prioritize what you want in life. I would love to have one Master’s degree before I turn 30, so that’s cool that you already have two! Are you planning on renting out one of the rooms in your house for rental income?

  7. As an owner of a mortgage-free property I can tell you how liberating it is. Granted we could have made a killing in the stock market, but it could have went the other way… But enough of my thinking it’s all a Ponzi scheme ;P It is nice to see your goal of killing the mortgage in such a short time. In fact, you should consider maintaining your current job afterwards. You make such a great deal of money, I cannot fathom you giving that up. It seems like it would be such a huge sacrifice. I think this way because my income is so low. Is your job/career that bad?

    • It really wouldn’t be that much of a sacrifice to give up my high-paying job if I already have a ton of money saved. In fact, I think it’s more important to be happy than to have a high-paying job. It would be nice to find a job that makes me happier than my current one and is also high-paying, but I would vote for happiness first. We’ll see how that unfolds.

      • You have the right mindset. You should enjoy the present, not just save for the future. I think you have saved up a lot in a short time that you can afford to get off the fast lane, be it to work in a more satisfying, even if low paying, job or going to grad school.

        Good luck!

        • Yep! What I’ve been trying to do is enjoy the present and save the amount that I don’t need. It so happens right now that I can save quite a bit of money despite doing that. I feel like $40k/year of spending provides a fairly rich life. I find that people who make less money don’t understand that a six figure salary doesn’t make you any happier than a smaller salary. Once you’ve provided yourself with a fair amount to spend and a bit of buffer, you’re not going to increase your happiness much beyond that.

  8. With DH’s new job offer, we could knock off the mortgage in a year while still maxing out my retirement options. We still need to figure out the benefits they’re offering before we have an idea what the actual take-home pay will be and so on.

    • Congrats to your DH on the job offer! It would be pretty cool if he had better benefits than you do.

      Do you want to knock off the mortgage? It has always seemed like you don’t want to do it that much quicker than you’re going at it now. Does he not have reasonable retirement options that you’re only considering maxing out yours? (Or maybe you just haven’t gotten those docs yet.)

      There’s a site called FutureAdvisor.com that has info on the 401(k) plans that a lot of companies are running and you can search for your DH’s potential company’s name and see if their plan comes up: https://www.futureadvisor.com/401k That can be helpful since you don’t always get info on the 401(k) until after you start.

      I’m curious to see what you guys end up doing! Would you rather pay off the mortgage or invest in a taxable account or split between the two somehow?

      • Turns out his benefits kind of suck. So he’s going to negotiate a bit more.

        I don’t think we actually *will* knock out the mortgage in a year, but we will up the prepayments from the tiny amount we’d been doing on my salary alone, and probably more than what we’d been doing on DH’s previous salary. We don’t have as many vehicles to save for retirement as we used to now that DH no longer has access to a 457, so it’s either mortgage or taxable stocks.

        • Sigh, that’s annoying. How do you determine that someone’s benefits suck?

          I actually didn’t originally set out to pay off the mortgage so quickly. I did, however, use how quickly I could pay off the mortgage as a metric to whether I could afford a place (had to be able to pay it off in < 7 years). I got a huge raise and extra bonuses between the first place I was trying to buy and when I actually bought a place and that made me change my mind. I still go back and forth some days though.

        • When they don’t offer a match with the 401k plan and when it would cost more for DH to go on their plan than to stay on my plan… the benefits kind of suck. (Presumably their health insurance offers better coverage, still they don’t pay all of the employee part even for just the employee.)

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